A hot climate is characteristic for most parts of Venezuela, because it is situated between the Equator and the Caribbean Sea. Given that the average temperature is 27C, it’s easy to imagine that people, especially during the summer, like to buy ice-cold drinks. To fulfill their wishes, almost every mom-and-pop store offers the soft drink products of Empresas Polar, one of South America’s largest producers and distributors of food and beverages.
Empresas Polar and SAP developed and implemented SAP xApp Mobile Direct Store Delivery (SAP xMDSD) for a direct sales model, which includes visits by pre-sellers and subsequent deliveries along with immediate van sales. The composite application for mobile business is fully integrated into the SAP Business Suite applications of Empresas Polar, which also runs SAP Customer Relationship Management (SAP CRM) and SAP Supply Chain Management (SAP SCM).
“With SAP xMDSD providing sales history data on handhelds, the pre-sellers and van-sellers of our soft-drink unit can now give more information to their customers. For example, they can show the kiosk owner that if he keeps buying mineral water at last month’s amount, he will run out because his sales are increasing over time. For a small shop or kiosk in a Venezuelan town, that’s an important issue,” explains Alejandro Bombaci, CIO at Empresas Polar. “SAP xMDSD also offers the opportunity to tell the kiosk owner the profit he will be making on the purchase, showing his expected sales and his margin.”
“Now when our van-seller for a route around Puerto Cabello, José Marcelo Rodríguez, stops at a kiosk, he makes the product offers, takes all the orders, and delivers the drinks as he has in the past, but he does it faster with the help of SAP xMDSD on his handheld. He immediately creates a record of the payment process without any paperwork. That means that he can spend more time with the customer and respond to the customer’s needs with a specific set of products – derived from actual turnover data from our SAP ERP back end, not based on estimations,” says Bombaci.
“We call this a focused portfolio. On his handheld, Rodríguez automatically sees only the products that are of interest to this customer, with no need to check our whole product line,” explains Bombaci. And SAP xMDSD also prioritizes his sales to the specific customer. “He can view the products he must sell to a specific kiosk, the products he should highlight, and the products that he can offer if the customer wants to try something new.”
Improvements from finance to logistics
Coming back to the warehouse at the end of the day, Rodríguez’s work isn’t finished yet. The settlement of his van-sales route still has to be done. With the help of SAP xMDSD, all relevant data of his route can be uploaded from the handheld to the back end, so that there is no need for typing any more. “Van-sellers like José Marcelo Rodríguez now save up to 50 percent of the time they used to spend in the office with the settlement,” says Bombaci.
What’s more, with SAP xMDSD, the logistics area receives the information faster and without mistakes. That’s why the SAP xApp composite application offers a better ability to assign delivery routes and maximize usage of the trucks in terms of volume of load or time. Another improvement is that Empresas Polar can predict and plan in advance how many vehicles are needed for delivery to customers and for plant to warehouse transportation.
Because of its integration into the ERP back end, Rodríguez’s colleagues in the financial department at Empresas Polar also notice the difference that SAP xMDSD makes for their work: exact posting of invoices has reduced the need to reanalyze financial information. Reconciliations at the end of the month have almost disappeared, which has led to a three-day reduction in monthly closings. “We have excellent control as all the information from the handhelds is available in SAP Business Suite, because the mobile devices do not operate in a separate satellite system,” explains Bombaci.
Partners in development
“During a long period of time, there was no software available that could cover the requirements for the mobile devices of our sales staff,” recalls the CIO. The situation changed when Empresas Polar started working with SAP in late 2001. “We signed the initial contract to get an application which was then called ‘Beverages with a handheld solution,’” says Bombaci. Since then, the Venezuelan company and SAP have worked together as partners to develop the software that later became SAP xMDSD. A lot of the experience and the requirements of Empresas Polar were incorporated into the application during that phase of development, including the adaptability of the software. Some requirements will become part of the new release, because the company is the pilot customer for SAP xMDSD.
The needs of soft drink sellers like José Marcelo Rodríguez required further enhancements from SAP as well as from the in-house-development at Empresas Polar. “The soft drink business in Venezuela is very tricky. It’s continuous competition about how creative pricing can be and how to give discounts with free products. With the enhancements, SAP xMDSD has grown to offer the functionality and flexibility we need; it shows the sales person the different pricing possibilities for each customer,” says Bombaci.
The opportunities offered by SAP xMDSD not only benefit pre-sellers or van-sellers like José Marcelo Rodríguez in the soft drink business, but are of great importance for the other two business units at Empresas Polar. “Soft drinks are primarily sold to kiosks and small shops. Our beer and malt sales force sells beer directly to bars, restaurants, and supermarkets. Food products like corn meal, marmalades, cereals, or canned fish are sold by another sales force to small grocers, restaurants, larger stores, and even to hypermarkets,” says Bombaci to explain the direct sales model his company uses in Venezuela and Colombia.
Bombaci describes the effects of SAP xMDSD on the whole supply chain planning process: “We get better sales predictions for the next month because we can really see the turnover for the customers. That means that we can reduce our stock, and if a customer wants less of something, it’s up to marketing to understand the reason and propose an alternative product that might be more attractive.” The CIO is convinced that with SAP xMDSD, “we can see the complete set of benefits from an integrated system. Everything flows seamlessly and users appreciate the extra amount of detailed information and the extra speed they’re getting.”
Increasing sales per visit
Empresas Polar has just finished implementing SAP xMDSD on all the handhelds of its food sales staff. Because the sales staff for soft drinks is much larger, their rollout will continue until the end of 2008. The beer business should start using SAP xMDSD at the beginning of 2009. With the effort to establish the composite application throughout the company, the number of users is increasing significantly: Today there are 750 handhelds running SAP xMDSD; at the end of the year there will be more than 1,000. By the end of 2008, the mobile application will be available on 1,800 or 2,000 handhelds used by the sales staff of Empresas Polar. And numbers will keep growing until the entire sales force of all three business units uses SAP xMDSD.
With the SAP xApp composite application, the company has been able to achieve considerable improvements in software integration. In the food business, Empresas Polar retired four back-end systems and five front-end applications for handhelds. “In the field of soft drinks sales, we are replacing another back-end system and two front-end applications. We really simplified the technology infrastructure,” says Bombaci. For him, SAP xMDSD “is so configurable and modifiable that we can keep the same underlying structure for varying business conditions.”
The success of the implementation of SAP xMDSD is becoming more visible: “We noticed that the number of stock keeping units sold per visit in the food business has increased 50 percent compared with last year,” says Bombaci. The CIO concludes, “Although we have no detailed data yet in terms of how much more sales we are doing because of SAP xMDSD, it’s clear that we have made great improvements in the productivity of all areas within our sales operations.”